"Investors have given up on the water industry -- the sector has fallen 60% --  but the best firms have hardly missed a beat," says Roger Conrad; here's two favorites in Personal Finance.

"The EPA stimates the US will have to spend $335 billion over the next decade to keep the taps turned on, given aging infrastructure and supply degradation.

"Service providers are the highest percentage way to play growth in global water spending. Demand fluctuates with weather depending on the season but has proven steady even during deep recessions, including this one.

"Water utilities’ earnings are based on the size of their rate base--the reservoirs, treatment centers, water mains and distribution pipes they use to provide service. The more money invested, the more rate base grows, which generates higher revenue, earnings and dividends.

"American Water Works (NYSE: AWK) and Aqua America (NYSE: WTR) are also growing via acquisitions. Some 85% of the US is still served by cash strapped municipal water systems.

"In 2002, German utility RWE bought out American Water Works at several times book value. Since 2007, however, it’s been selling off its holdings at barely book value. Their loss is our gain.

"RWE still owns 49% of shares, which is likely to weigh on the market for a while. American, however, continues to grow.

"It has a thriving business managing municipal systems and continues to pursue new contracts as well as outright acquisitions in the 32 US states it serves. American Water Works yields a safe 4.5%.

"Unlike American, Aqua has no system management business but owns 100% of the infrastructure it operates. The company has completed hundreds of acquisitions since former Pennsylvania regulator Nick DeBenedicitis took the reins in the early 1990s.

"This year it’s taken over another half a dozen, including a small municipal system in the Keystone State that could be the harbinger of more muni buys in the 13 states it serves.

"Aqua’s earnings growth has been a picture of consistency for years. And with the company on track to invest a record $300 million in 2009, there’s more ahead."